On 09 August 2023, HMRC advised software developers of new National Insurance category letters to include in software from 06 April 2024 – N, E, K, and D. These new NI letters will apply to the new Investment Zones that have been set up and will result in Employers NIC relief similar to existing employer relief.
There are already National Insurance ‘holidays’ that exist for employers where, on payday, the employee is:
- Under 21
- Under 25 and on an approved apprenticeship
- Ex-Armed Forces personnel/veterans and
- Employees of employers in Freeport Zones
The holiday relates to the amount of National Insurance payable by the employer, not the employee.
HMRC has called this new initiative Investment Zone Employer NICs Relief (IZENR).
On 23 September 2022 the Growth Plan included reference to Investment Zones in England, areas that would provide ‘time-limited tax reliefs’ and ‘planning liberalisation to support employment, investment, and home ownership’. The UK Government would work with the devolved nations on similar Zones so that they are delivered UK-wide.
The Chancellor, Jeremy Hunt, announced in his 17 November 2022Autumn Statement (point 3.25) that there would be a ‘refocus’ of this program.
HMRC’s March 2023 Policy Paper gave more information and how the November 2022 refocus changed things, specifically the value of the IZUST. Originally it was going to be £50,270 per annum, i.e. the value of other NI holiday regimes such as that for under 21s, apprentices, and veterans.
The new threshold (IZUST) will now be £25,000 per annum, the same value as the Freeport Upper Secondary Threshold (FUST).
If an Investment Zone tax site becomes operational before 06 April 2024, employers should claim the IZENR using the Freeport NIC category letters instead – and then remember to changes them to the relevant Investment Zones ones in April 2024.
Investment Zones have been merged with Freeport Zones and renamed as ‘special tax sites’, i.e., the definition of sites where there are tax reliefs.
The date on which tax reliefs for special tax sites ends was originally 5th April 2026.
Now, the end date has been reset to 30th September 2026, meaning that the eligible employee will have had to start between 5th April 2023 and this date for the employer to claim NICs relief (both Freeport and Investment Zone).
